Relationship between the reduction of global import tariffs and economic growth: An empirical approach

Abstract

The purpose of this research was to empirically determine whether the reduction of global import tariffs (GIT) influenced the economic growth of Peru for the period 1980-2022. To this end, an econometric model was constructed to analyze the relationship between GIT (represented by the average nominal tariff) and economic growth (represented by per capita GDP). The sample consisted of 43 observations on an annual basis. The study adopts a quantitative approach, is ex post facto, non-experimental, and longitudinal in design. The estimations reveal that a 1% reduction in GIT can increase per capita GDP by 14.7%. Additionally, the study identified other explanatory variables of economic growth, such as terms of trade, final government consumption, GDP of Peru's major trading partners: the United States, China, European Union and Mercosur.